Can Europe actually make it?

Between a destroyed economy, blatant institutional dysfunction and fledging popular support, the current picture of the EU looks bleak. But it is not the end of the Union yet!

Shutterstock/Gunnar Pippel. All rights reserved.

Europe is in dire straits at the present moment but it
is not a “no-future” basket case. Nor is close cooperation between European
countries becoming a thing of the past. Close cooperation is needed now, it was
needed yesterday and it will be needed tomorrow. The question is now whether
the leading European countries can sufficiently understand their
responsibilities and disregard short-term interests and small victories in
favour of long-term gain.

There have been some misunderstandings about the
current economic crisis. The crisis is more than a conjectural swing, a blip on
the screen that will go away soon. Nor is it a crisis of capitalism as such.
But it is a crisis for the neoliberal model of capitalism which has dominated
the old capitalist centers in recent decades, Europe, North America, and Japan.
The model is too heavily tilted towards securitization and financial
speculation, it is too deregulated, and it is too unequal because it does not
have enough to offer for the large middle classes and the less skilled groups
in our societies in terms of income and employment.

A reform of that model is surely necessary. A reformed
model needs to emphasize the production of real goods and services, gainful
employment, and sound finance; in short, a more robust and less speculative
capitalism. But note that the crisis is not first and foremost an EU crisis. It
is a crisis for the old capitalist heartlands in general. It is the United
States, not Europe that has taken the current model to extremes. In the United
States, the richest one percent of the population took home about seven per
cent of total income in the mid-seventies; today they own more than 20 percent.
Meanwhile, huge sections of the middle and working classes have stood still, with
no substantial progress over some three decades. With a shrinking job basis
because of neoliberal globalization, this is not a sustainable model in the
long or even in the medium run. So when US observers look at the present
situation in Europe and shake their heads, they should rather be looking
inside, at their own situation. They are sitting on a huge problem, not a
solution.

But let me focus on the present crisis in the EU. Unfortunately,
the EU has not seized the opportunity, and therefore it might let a good crisis
go to waste. Focus is on short-term stabilization of debt-ridden countries via
austerity measures. More middle- and working-class despair in these countries
is the unavoidable result. How can you blame the people in the streets of
Madrid and Lisbon and Athens and Rome for thinking that the EU appears very
keen on bailing out banks but not very interested at all when it comes to
bailing out ordinary people?

What went wrong and how could it all get so bad? As
always, there are several elements involved, some of which we perhaps should
have noticed earlier when we were too fixated on European successes. First, we
did not sufficiently see that the EU contains member states that are fragile,
ineffective, have serious corruption problems, weak capacities for adopting and
implementing rules and regulations, and are excessively dominated by vested
interests that have been successful in taking care of themselves on behalf of
the state. Eurozone membership handed such states an almost unlimited access to
cheap credit. The results, when ample funds flowed into fragile states, ought
to have been predictably disastrous.

Second, the vast differences between member countries
of the eurozone were played down, and perhaps expected to disappear very soon -
they didn’t. In retrospect, the euro was not an economically sound project; it
made more sense in terms of political prestige, i.e. “driving integration
forward”. Third, to the extent that rules were in place, no member of the
euro-zone was particularly interested in respecting them and enforcing them
when things looked better.

The economic crisis will risk exacerbating a
legitimacy crisis for the EU. Anonymous bureaucrats take far-reaching decisions
behind closed doors and people suffer. It is no help that national politicians
are talking European cooperation down rather than up. They blame the EU for
every problem and take personal credit for every success – but the sad part is
that sometimes people believe them.

This all happens at a time where we have a globalized
world where the need for cooperation between countries is higher than ever. And
since global governance will continue to be relatively weak and underdeveloped,
our best bet continues to be regional cooperation. But it will not be enough to
re-arrange the deck-chairs on the Titanic. A reformed economic model is needed,
and so is a reformed political-institutional model. Liberal democratic theory
has never really answered the question about how to construct healthy democracy
outside of the nation-state framework. How to proceed in a situation where
old-fashioned international cooperation is not enough and a full federation is
not in the cards? We need better answers to that question.

As for the short-term, the immediate agenda is clear:
The only way forward is to formulate practical solutions to common economic,
social, and political problems, preferably so that ordinary people can see that
the EU is also for them, it is also their project. The major concern of
ordinary people at the present time is unemployment; this is where something
must urgently be done.

At the same time we have had a lesson about the
continued importance of the national level. National government continues to be
of crucial importance and it needs to be effective, legitimate, responsive, and
uncorrupt. In this, there is also some good news: the EU has, in recent
history, played a large role in leading national government in that direction,
both in Southern Europe and in Eastern Europe. It needs to move further in that
direction, but it must not antagonize people in these countries while doing so.

I think many of us have been liberal idealists for
quite some time after the Cold War ended: we believed that with the universal
victory of liberal democracy and liberal market economy all would be good. But
we have learned that the liberal economic and political model is full of
problems and tensions and that it always needs to be adapted and modified to
meet current challenges and present-day problems. At the present time, we are
on the search for a liberal model that works in the sense that it offers a
decent future to the large majority of people. Not only the EU, but national
governments and thinking individuals have a responsibility in this regard.

So can Europe make it? Yes we can. Europe continues to
have the potential to become a major world player. In terms of hard power, this
will require closer cooperation and coordination. It is by no means necessary
to rival the United States in terms of military hardware; what Europe needs is
better coordinated smart power, which is really focused hard power. What Europe
most needs is to beef up its soft power; we have a record of cooperation and
achievement that should not be underestimated. We can build on that to reform
our model and reclaim our soft power. The UK model of every country for itself
is a road to the irrelevance of Europe.

At the same time, leading countries including Germany
have not sufficiently realized that they to take more responsibility for a
sustainable, long-term European project. Germany, and other “euro-winners” such
as the Netherlands and Finland have to chip in, in order to create a more
symmetrical system with better prospects for economic growth, not least in the
European periphery. The system must have something to offer ordinary people in
the fragile member-states, or suffer a further dramatic loss of legitimacy.
Mark Leonard, the Director of the European Council on Foreign Relations, a
pan-European think-tank, recently called for European governments to “set out a
radical vision for rethinking Europe which deals with the efficiency and the
legitimacy crises at the same time”. He is right and now it’s up to European
leaders to move in the right direction and it’s up to the rest of us to help
pushing, and to clarify what the real problems are and what can be done about
them.

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